Welcome To The Golden Band Resources HUB On AGORACOM
Saskatchewan's SECRET Gold Mining Development.
Message: Charts & Comments
Rummaging Around
In rummaging around this week, looking at the insider holdings, one insider you might completely miss is the Resolute Fund. Last February, the Resolute Fund bought in with 26 million shares, with an addtional 12m. warrants. The information on Resolute is limited, because its a private fund that does not want to give out its strategy by having to report on its holdings.
Alternative Monthly Report(pdf) for February, as found on SEDAR:
Its an important development in the emergence of the company as a gold producer to have an independent fund take such a large stake. And virtually un-announced.
A quick search on Google will fill you in:
The Extended Daily Chart
The recent run-up and pull-back of the stock price wasn't a breakout move just yet, as extending the daily chart will show us. The measured target now lines up with projections on the weekly chart, and simplifies the analysis of the monthly chart. We have re-tested the 50-day MA a couple of times, so this level should hold here.
The monthly chart is giving us some mixed signals, on the technical side, but the daily chart shows how the right shoulder is now complete on a somewhat lopsided inverted head and shoulders formation.
The major damage inflicted on the price chart, therefore on the company and its shareholders by the Department Of Fisheries And Oceans cannot be underlined enough:
supersize: http://www.flickr.com/photos/11747277@N07/4671665064/sizes/l/
Snapshots Of The Close
The same dynamic that saw the share price rise during the flash crash is still working to support the share price as the markets come off. A very large naked short position, where the vendor made daily sell orders since as long ago as 2007, had begun to settle those positions by settling this outstanding claim to the tune of tens of millions of shares since Oct. 2009.
Months later, they're still in net settlement and are well ahead of the pack. For just about every share that was sold into the market without first buying any, this trade is now being settled, but the irony is that numerous other traders are attempting the same strategy in complete ignorance of the fundamentals. So very likely these follow-on naked shorters, who are literally gambling with their client's money on the sell-side, are selling you the boa constrictor they themselves will eventually be devoured by. (the risks here are very real.)
The longs appear to be very well positioned to reap the advantages of a buy and hold strategy.
Here we see 'National Bank' continuing to buy into the market when several sellers oppose any share price rise. The last trade was around 2:30 in the afternoon. Usually the close sees heated activity, but this was a Friday.
supersize: http://www.flickr.com/photos/11747277@N07/4671734274/sizes/l/
Note the outsize bid at the close, where the expectation here was a sell-off during a market decline, but none forthcoming.
Delayed Market Depth By Price Summary
Looking at the market depth by volume on the TMX website for GBN.V shares, there is an outsize bid at various levels within the confines of the 50-day MA and the neckline on the daily chart. A brief snapshot here of the situation suggests that more buying will occur than selling and that the share price will rise, though this is not always a given.
$IRX Weekly
The $IRX weekly chart is indicating a decline in the markets, though we have yet to see another alarming decline such as the flash crash. This chart is very important from the perspective that it outlines the demand for short term money, thus lowering yields such as the discount rate, and also forecasting a rise in the gold price. Naked shorting positions have to be settled with cash and the immediate demand for cash throughout the markets during declines means lower yields. The lower the yields at this stage of the game, the more pressing the urgency to settle, at least for GBN.V shares. GBN.V shares performed well during this flash crash scenario and have held up well in lesser declines.
If we go below the 34-week EMA on the $IRX weekly chart, then the conditions here will be the same as a major market crash. Note that the time period marked out with vertical lines is almost exactly the time interval required for another major decline. Certainly a major adjustment in the stock markets would be seen as a 'crash.'
An important technical indicator here will be the rollover of the TRIX, which is anticipating a crossover. The log scale chart is the best one to depict the $IRX, since short term yields have declined so much since 2007.
supersize: http://www.flickr.com/photos/11747277@N07/4671785406/sizes/l/
Prognostications On The Target Price For Gold
Bob Hoye is now publishing his outlook for the advance in the price of gold, and giving it around $2100/oz. U.S. At the very least, gold prices should obtain their 40-year inflation adjusted average in 2009 constant dollars. That inflation adjusted average is determined by calculating inflation by replacing government massaged statistics at shadowstats.com and as presented on golddrivers.com, to give a realistic interpretation of inflation-adjusted prices. In gold, that would mean $1673/oz. U.S.
source: http://www.321gold.com/editorials/hoye/hoye060310.pdf
Going by the oil price mania that blew out in 2008, the oil price advanced from a low of ~$11U.S./bbl. to a high of $147U.S./bbl. In each advance of the oil price mania, we saw a prime number multiple at work of 3 - 5 - 3. Three times the low, then five times the low, then again three times the low. This is not hyperinflationary.
In gold, the first up wave saw a multiple of 4.09 times the low of $252/oz. U.S. More than likely the advance of the price of gold in the next upwave should be at least 3 times the low of $681/oz. U.S. But dollars to doughnuts the next upwave could be 4.09 times the low, and then crash severely back to the 40-year inflation adjusted average, or just above it of $1673/oz. U.S. But first, the advance of the gold price will probably happen in stages and normalize around $1673/oz. U.S.
The speculative fervour has entered the gold markets with theories of hyperinflation, sovereign bond collapses, currency crises, so there is a possibility that gold price can advance more than expected. This is no different than the Uranium mania, or the Oil price mania. What is bringing on the advance in the gold price is not hyperinflation, but negative implied short term yields. People don't seem to realize that since 2000, short term yields have declined precipitously in the bond markets and yield curves have flattened in the process. This may eventually result in negative short term yields in the overnight or the repo markets.
James Turk
http://radio.goldseek.com/nuggets/turk06.01.10.mp3
In terms of GBN.V for mining, that means an average gold price going forwards of $1673/oz. U.S. GBN.V would be profitable at $600/oz. U.S. The company could pay out a dividend of 3¢/share per month and still have more cash than it needs to sustain organic growth, based on 100k oz. per year. At $1200/oz U.S. the company can easily pay out a dividend of 1¢/share per month without impairing the organic growth. (based on 100k oz. per year.)
Gold has gone beyond the point where any developmental considerations in building a mine will impact the NAV of a company in any way. Saying that one gold junior should be valued less than another because of where it is in development IS CATEGORICALLY AND FUNDAMENTALLY WRONG. Gold in the ground is gold in the ground. Stick that in your pipe and smoke it.
Deutsche Bank’s Lewis Says Gold May Rally Past Record on Crisis
June 04, 2010, 2:02 PM EDT
By Alex Emery
June 4 (Bloomberg) -- Gold, which touched a record of $1,249.70 last month, may rally another 36 percent as Asian central banks buy for the first time in two decades, said Michael Lewis, head of commodities research at Deutsche Bank AG.
The precious metal may rise to as much as $1,700 an ounce over the next year on concerns that budget deficits will weaken major currencies, Lewis said in an interview yesterday in Lima. Exchange-Traded Funds, known as ETFs, where gold futures make up 80 percent, are also having an “enormous impact,” he said.
Canadian goldminer decries 'horrible' tax
BARRY FITZGERALD
June 5, 2010
IT HAS been a bitter-sweet week for Canada's Crocodile Gold Corp. It has just declared the first commercial production from its revival of a suite of gold projects in the Northern Territory that it acquired last year from the liquidator of GBS Gold Australia, spending $120 million and creating 300 jobs in the process.
But instead of celebrating its move towards annual output of 100,000 ounces in 2010 and 200,000 ounces in 2011, the Toronto-listed group is finding it spends most of its time answering questions from its North American and European investor base about the Rudd government's proposed 40 per cent resource rent tax. Crocodile president and chief executive officer Mike Hoffman said during the week that the proposed tax was ''horrible''. While Crocodile remained keen on Australia's ''fantastic mineral endowment'' and would look to continue to expand here, the proposed tax raised serious concerns about the future flow of investment dollars into the sector.
Saskatchewan Royalty Regime For Diamond Mining
-F6
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